Forex Major Currencies Outlook (Oct 14, 2014)

US banks were on holiday yesterday, which explains the lack of trending price action. Traders are expected to return to their desks today, although data is still light from the US economy. With that, risk sentiment could continue to drive forex movements, with a risk-off environment continuing to favor the safe-haven dollar.

EUR

The euro regained ground in recent trading, as most banks were on holiday yesterday. Data from the euro zone came in line with forecasts, as the German WPI marked a 0.1% uptick as expected. The German ZEW economic sentiment figure is up for release today and it might show a drop from 6.9 to 0.2, reflecting another downturn in confidence. Euro zone industrial production data is also due today and a 1.5% drop is eyed.

GBP

The pound moved mostly sideways in yesterday’s sessions since there were no reports released from the UK economy. UK CPI could provide pound pairs more direction today, with the headline inflation reading likely to drop from 1.5% to 1.4% and the core version to show a decline from 1.9% to 1.8%. If so, this would cast more doubts on the BOE’s readiness to tighten next year and push the pound lower against its counterparts.

CHF

The franc recovered to the dollar and the euro, despite the lack of data from Switzerland yesterday. Only the Swiss PPI is due today and it might show a 0.2% rebound, enough to spur more demand for the franc and ease deflationary fears in the country. However, the franc might also be swayed by euro zone data, which could show a deeper slowdown in the region.

JPY

The yen continued to rally against its counterparts as risk aversion dominated market movements. Japanese banks were closed yesterday and there were no reports released from Japan. There are still no reports due from Japan today, leaving yen pairs sensitive to risk sentiment.

Commodity Currencies (AUD, NZD, CAD)

The comdolls took advantage of the US holiday and proceeded to advance against the dollar yesterday. Chinese trade balance was weaker than expected, but underlying data showed a strong improvement in both imports and exports. Earlier today, the Australian NAB business confidence figure marked a decline from 7 to 5, reflecting weaker optimism. No other reports are due from the comdoll economies today.

By Kate Curtis from Trader's Way